Wabash National's Q3 2025: Contradictions Emerge on Tariffs, Market Recovery, and Production Costs

Date of Call: October 30, 2025

Financials Results

• Revenue: $382.0M, below prior guidance range of $390M-$430M (shipments: ~6,940 trailers and ~3,065 truck bodies)
• EPS: Adjusted net loss of $0.51 per diluted share (negative $0.51), below expectations
• Gross Margin: 4.1%, below expectations (affected by lower volumes and operational inefficiencies)
• Operating Margin: Adjusted operating margin negative 6.2% (below expectations)

Guidance:

• Q4 revenue $300M–$340M; EPS -$0.70 to -$0.80.
• Full-year 2025 revenue ~ $1.5B; EPS -$1.95 to -$2.05 (reduction vs prior midpoint of roughly $100M revenue and $0.85 EPS).
• Q4 expected to be the weakest quarter; company will realign costs and preserve liquidity.
• Traditional CapEx lowered to $25M–$30M; approx $40M investment to support Trailers as a Service; expect to be near cash-flow breakeven for the year.
• 2026 order book is open; company is cautiously optimistic about a gradual recovery.

Business Commentary:

* Challenging Market Conditions and Revenue Trends: - Wabash National Corporation reported consolidated revenue of $382 million for Q3 2025, lower than expected. - The company shipped approximately 6,940 new trailers and 3,065 truck bodies, reflecting softer-than-expected demand, particularly in the truck body business. - Market conditions remained difficult, with softness across medium-duty chassis production and easing demand across most end markets, including freight activity, construction, and industrial sectors.

• Parts and Service Segment Growth:
• The parts and service segment generated $61 million in revenue, marking the third consecutive quarter of both sequential and year-over-year growth.
• Revenue grew by 16% year-over-year and about 2% sequentially, driven by structural growth in the market despite a decline in OE equipment production.

• This growth is attributed to the segment's ability to provide more value-added services and resilient revenue streams, particularly through upfit offerings and Trailers as a Service (TaaS) initiatives.

• Impact of Tariffs and Market Dynamics:

• The inclusion of dry van and refrigerated trailers in Section 232 steel and aluminum derivative tariffs is expected to affect the competitive landscape.
• The tariffs are anticipated to benefit U.S.-based manufacturers like Wabash, potentially leading to improved market share dynamics as the cycle strengthens through 2026.

• However, effects are expected to take time as competitors evaluate sourcing strategies and pricing responses.

• Cost Management and Financial Outlook:

• The company revised its full-year 2025 guidance to midpoints of $1.5 billion in revenue and approximately negative $2 in adjusted EPS.
• Despite the challenging market conditions, the company maintained its focus on cost discipline and pursuing share gains to align with near-term market realities.
• Wabash aims to be near cash flow breakeven for the year, including approximately $40 million of investment for Trailers as a Service, reflecting its commitment to long-term growth.

Sentiment Analysis:

Overall Tone: Negative

• Management said Q3 "came in below plan" with revenue of $382M and backlog down to about $800M; reported gross margin of 4.1% and adjusted operating margin of -6.2%, lowered full-year guidance to ~$1.5B and ~- $2 adjusted EPS, and called Q4 the weakest quarter while emphasizing cost realignment.

Q&A:

• Question from Jeffrey Kauffman (Vertical Research Partners, LLC): Can you dive into the Section 232 tariff — how it works, how you were hit by tariffs in Q3 (steel/aluminum on trailers or parts), and how the tariff will level the playing field vs competitors that build in Mexico?
  Response: 232 targets steel/aluminum content and will phase in over months with competitive effects materializing primarily in late 2026; Q3 direct impact was minimal (~$1M from vendor pass‑throughs), similar in Q4, and management expects supplier cost pass‑throughs to increase in 2026 and be priced into finished goods.

• Question from Jeffrey Kauffman (Vertical Research Partners, LLC): Based on your Q4 revenue midpoint (~$320M), what is the implied shipment count (you did ~6,940 trailers and ~3,065 truck bodies in Q3)?
  Response: Truck body shipments expected to fall to ~2,000 in Q4 (vs ~3,065 in Q3); trailer deliveries expected to be slightly lower than Q3 (~6,940) but no precise trailer count was provided.

• Question from Michael Shlisky (D.A. Davidson & Co., Research Division): Platform trailers appear to be a bright spot — are you participating in that upside, what's behind it (data centers/infrastructure), and are you seeing orders?
  Response: Wabash sees tailwinds and customer interest in platform trailers and is active in quoting/discussion phase; early indicators are favorable but orders have not yet fully converted into backlog.

• Question from Michael Shlisky (D.A. Davidson & Co., Research Division): On recent orders/pricing, are you seeing pushback or ability to raise prices?
  Response: Pricing is mixed: pockets of positive pricing in certain niches, while many products have lower ASPs versus ~18 months ago; overall pricing trends align with the company's 2026 forecast.

• Question from Michael Shlisky (D.A. Davidson & Co., Research Division): On fleet dynamics, how far along is fleet rightsizing/capacity exiting the market and will asset liquidation precede new purchases?
  Response: Management expects a meaningful acceleration of capacity exiting over the next ~6 months (fleet 'rightsizing'), which could improve freight pricing and prompt replacement demand beginning mid‑2026; limited legacy asset liquidation impact is expected on Wabash's core customers.

Contradiction Point 1

Impact of Tariffs on Market Dynamics

It involves differing views on how tariffs, specifically Section 232, affect market dynamics and the potential leveling of the playing field against competitors, which could influence pricing and competitive strategies.

How did tariffs impact your third quarter performance, and will Section 232 help address competition from Mexico-based trailer manufacturers? - Jeffrey Kauffman (Vertical Research Partners)

2025Q3: The 232 tariff specifically deals with steel and aluminum, not leveling the playing field in all aspects. It doesn't fully address other cost differentials. - Brent Yeagy(CEO)

Is the industry's efficiency driven by technology reducing assets, or is the fleet shrinking due to freight volume? - Michael Shlisky (D.A. Davidson)

2025Q2: While there are inroads in efficiency through technology, the overall inefficiencies outweigh the efficiencies. Current technology advancements are not transforming the market significantly at scale. - Brent L. Yeagy(CEO)

Contradiction Point 2

Capacity Exiting the Market and Market Recovery

It involves differing expectations regarding the timeline and impact of capacity exiting the market, which could influence market recovery and demand for new trailers.

What is the current pricing for trailer and truck body sales? - Michael Shlisky (D.A. Davidson)

2025Q3: We expect significant capacity to exit the market over the next 6-12 months. This will create positive freight pricing dynamics, potentially affecting demand in mid-2026. - Brent Yeagy(CEO)

What are the key factors driving order rate growth in 2026? - Michael Shlisky (D.A. Davidson)

2025Q2: Two key factors are capacity leaving the market and fundamental freight-producing subsectors improving. - Brent L. Yeagy(CEO)

Contradiction Point 3

Impact of Tariffs on Production Costs

It highlights differing perspectives on how tariffs, specifically the 232 tariff, affect production costs and potential offsets, which are crucial for understanding the company's financial outlook.

How did tariffs impact your third quarter, and how will Section 232 affect competition with Mexican trailer manufacturers? - Jeffrey Kauffman(Vertical Research Partners, LLC)

2025Q3: The 232 tariff specifically deals with steel and aluminum, not leveling the playing field in all aspects. It doesn't fully address other cost differentials. - Brent Yeagy(CEO)

Has there been any issue with steel purchasing or pricing affecting margins? - Mike Shlisky(D.A. Davidson)

2025Q1: All the pricing pressure around commodities is built into our full-year guide. We shouldn't see a bigger reduction in profitability for the rest of the year compared to the first quarter. - Brent Yeagy(CEO)

Contradiction Point 4

Tariffs and Competitive Impact

It highlights differing perspectives on the impact of tariffs, particularly the Section 232 tariff, on the competitive landscape and cost structure, which could influence strategic decisions and financial forecasts.

Can you discuss how tariffs impacted your third quarter and how Section 232 will balance the playing field against Mexican competitors? - Jeffrey Kauffman(Vertical Research Partners, LLC)

2025Q3: The 232 tariff specifically deals with steel and aluminum, not leveling the playing field in all aspects. It doesn't fully address other cost differentials. The 232 impact will likely be more significant in 2026, primarily affecting the 2027 buying season. - Brent Yeagy(CEO)

What are customers discussing about tariffs, and is there renewed interest in trailer pools? - Jeffrey Kauffman(Vertical Research Partners)

2024Q4: Wabash is well-positioned for potential tariffs. We have reduced supply chain exposure and can shift production if necessary. - Brent Yeagy(CEO)